Consider Outsourcing
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Consider Outsourcing Vinay Nagpal Director, Product Management Hosting & Data Center Services Tata Communications
Computer World Forum Data Hot-House Summer 2008
©2008 Tata Communications, Ltd. All Rights Reserved
Considering Outsourcing? Why buy the cow if you need only the milk? Why run your own data centers when you can just pay to have your machines hosted or have your computing resources supplied as a utility?
There are cases where it may make sense to have your own farm!
2
The CIO’s conundrum “Need to show the value of IT to the business” “Need IT infrastructure to support mission critical applications" “SLAs aligned to needs of the business? – the performance – cost trade-off” “Business needs changes implemented quickly – but we need to get it right” “Users are getting more and more demanding. There is a deluge of information to manage, and the underlying infrastructure is complex" “Our internal admin costs are too high” “We need to improve business performance” “We don’t know what we have got out there” “We need to be more customer oriented”
3
Global Data Center Marketplace
The New World
Globalization
Web 2.0
India & China
5
Data Center Market Trends
Various ‘Sourcing’ models Enterprise data center/IT consolidation Convergence of network & IT realms SPs adopting Virtualization/SaaS Utility Computing Increased volume of digital media Flexibility and support to scale IT infrastructure – web, apps, databases Increased power/cooling requirements Space constraints driving next-generation data center
6
Business Drivers for Outsourcing
7
Global Data Center Market IDC has forecast that the market will grow from $29.57 billion in 2005, to $48.37 billion in 2010 (CAGR of 10%). Worldwide IT and business services: Focus on SMEs, global assets, global sourcing for innovation, and industry focused BPO IDC’s latest forecast for the Asia/Pacific market (excluding Japan) in IT Services: 2010 China will overtake Australia In 2011 India will overtake Korea to become the third largest market in the Asia Pacific region.
8
India and China will improve their position in the APAC DC market APAC Data Center Market Split by Country (%)
INDIA Data Center Outsourcing ($ million)
“As China and India increasingly redefine the future of technology and innovation, knowing how to map a course into that future will be a core competency of the most accomplished travelers” … Gartner
Source: Gartner
9
Asian Data Centre Space Forecast: 2006 to 2010 4500
China
4000
Hong Kong
3500
Indonesia
3000
India Japan
2500 2000
Korea (South) Malaysia
1500
Philippines
1000
Singapore Taiw an
500
Thailand
0 2006
2007
2008
2009
2010
Chart 1 - Data Center Space Grow th Forecast 2006-2010 by country (Source: BroadGroup)
10
Asian Data Centre Market Forecast: 2006 to 2010 Country
2006
2007
2008
2009
2010
CAGR%
600
725
900
1150
1450
35
1100
1200
1300
1550
1750
13
320
360
400
480
530
40
India
1900
2500
3000
3500
3700
24
Japan
3800
3900
4000
4100
4200
3
Korea (South)
1000
1150
1250
1350
1400
10
Malaysia
900
1200
1300
1400
1500
15
Philippines
900
1000
1100
1150
1200
8
Singapore
1300
1500
1600
1700
1750
9
Taiwan
800
850
900
950
950
5
Thailand
1100
1150
1200
1250
1300
5
13420
15335
16950
17330
19580
11.5
China Hong Kong Indonesia
Total
Asia Data Center Space Forecast 2006-2010 (figures in '000 square feet) Space forecasts are based on carrier neutral facilities, carrier owned data centers, and space provided by hosting or IT service firms.
11
Drivers of Data Center Growth Globalization & Outsourcing
Regulation & Business Continuity
Outsourcing of IT and application development demands infrastructure and managed services Entry into new markets requires IT infrastructure and capabilities Alternate IT infrastructure and services for business continuity and compliance, particularly for Banking and Financial Services companies Data privacy and security issues Serve customers quickly and locally to improve experience
Time to Market Considerations
Application and services roll out to emerging markets such as India, China and South East Asia Data Center Infrastructure easily available for applications
Reduced IT Budgets
Rising costs of real estate and power Technology obsolescence, manpower churn, management overheads Skills of M&E – not necessarily core to IT
12
Challenges in building your own Data Centers
Real Estate
Core Infrastructure
Operations
Availability and cost
Space size and scalability
Proximity to fiber and choice of providers
Commitment - contract vs. lease
Heating, Venting, Air Conditioning (HVAC)
Power infrastructure and costs
Security (manned, access, surveillance)
Environmental controls – M&E
3 P’s: Pipe, Power, Ping
Maintenance
24x7 support (3 Shifts)
Monitoring
Security
Staffing and retention of skills
Statutory approvals and regulations
Fire suppression
Multiple vendor contracts
13
Selection criterion to Outsource IT infrastructure Location: Globally expansive footprint Ability to deliver consistent services across multiple regions Data centers in mature markets and emerging markets
Connectivity: Highly available, secure and integrated network
People: Technically competent IT staff
IT infrastructure and management: Well-defined and flexible roadmap Operational efficiencies Adherence to compliance
Financial Viability
14
…and sometimes it makes sense NOT to Outsource
Assets on the ground Custom/legacy system requirements Security requirements Extent and depth of management oversight Regulatory and compliance issues TCO consideration Footprint and facilities requirements
15
Data Centers Outsourcing Options in Asia Pacific Australia & New Zealand
Good IT infrastructure Experienced IT staff Good service quality Network latency – far from Asia No direct routes connecting India & China
South Korea, Japan & Taiwan Good network to China & HK Service quality and network performance are good Far from South Asian countries Limited capacity to India High labor and real estate costs
Hong Kong & Singapore
Good IT infrastructure Experienced IT staff Excellent network coverage Good language skills High labor & real estate costs
India & China Growing markets Service quality improved but inconsistent IT skills are improving Limited international connectivity Huge domestic market
16
Tata Communications in the Data Center Market
Vision Deliver a new world of communications to advance the reach and leadership of our customers.
Emerging Markets INDIA, ASIA incl CHINA, SOUTH AFRICA
NEW NEWWORLD WORLDOF OF COMMUNICATIONS COMMUNICATIONS
Converged IP Solutions
Managed Services
18
Tata Communications Data Center Strategy Global Footprint
Data center infrastructure in key geographies Presence in both developed and emerging markets
Integrated with Network Services
Leverage extensive global network integrated with data centers Network Services: IP, MPLS, Ethernet WAN for DC and end sites Carrier diversity to support redundancy requirements
Consistent Service Capabilities
Data centers are based on consistent standards – Tier 3 specifications Based on global and industry standards – ISO 20000, 27001, SAS70
Out-tasked Managed Services
Managed IT infrastructure services – servers security and network Managed Hosting and Storage Standards-based management for consistent service capability
Captive Data Centers
Leverage in-house experience and expertise along with partners to build captive data centers
19
Data Center Services and Capabilities Infrastructure
Multiple hosting and colocation facilities Network Colocation and IT Hosting suite of services Data Centers build to Tier 3 standards Integrated with backbone network
Colocation
Racks and cages Remote Hands Services IP and Bandwidth Services Managed Security- Firewalls, DDoS, and UTM
Hosting Services
Managed Hosting Services – Servers, Storage, Security, Network Virtualization, DB, Dual Site Recovery Replication in development 24 x 7- operations, management and monitoring and OS level management; Linux, Solaris, Windows, AIX Centralized Management Platform with customer view portal
20
Tata Communications – Global Footprint of Colocation and Hosting Facilities UK Stratford, London Highbridge Peterborough
EUROPE Lisbon, Portugal Seixal, Spain Derio, Spain
NORTH AMERICA Canada • Montreal • Toronto
USA • • • • • •
New York, NY North Alameda, LA Santa Clara, CA Portland, OR Wall, NJ Guam
INDIA • • • • • •
Mumbai Chennai Delhi Bangalore Hyderabad Pune
ASIA PACIFIC Shinagawa, Tokyo Toyohashi, Japan Singapore
21
The Road Ahead…
The Next Wave Driving Data Center Outsourcing Green IT
Energy use and power and cooling management and optimization New IT systems and infrastructures; alternate sources of power Cost reductions and savings; environmental impact
Virtualization
Logical server installed base growth: 65 million versus 45 million of physical server install base by 2010 Virtual Data Center; from consolidation to dynamic flexible infrastructure Anywhere Enterprise; DC, Application, Network and Desktop virtualization
Captive Data Centers
BO, BOT models; for the enterprise, but operated, managed as a service Issues of capacity management, infrastructure upgrades, aligned to business needs
Security
Anytime, anywhere information availability drives shift towards policybased security management and administration
Application/ Content Delivery
Networks make it a reality; network as a delivery platform; orchestration of virtual resources
23
Summary Key drivers for Data Center Outsourcing
Cost savings by avoiding capex investment Limited IT skill-set Technology challenges Improve performance and availability of IT systems and websites
Asia Pacific region is positioned to take a significant portion of Global Data Center Market Singapore is currently the regional hub of Data Center business Increased focus on emerging markets – India & China
24
Thank you! Vinay Nagpal Tata Communications www.tatacommunications.com
Computer World Forum Data Hot-House Summer 2008
©2008 Tata Communications, Ltd. All Rights Reserved
Considering Outsourcing? Why buy the cow if you need only the milk? Why run your own data centers when you can just pay to have your machines hosted or have your computing resources supplied as a utility?
There are cases where it may make sense to have your own farm!
2
The CIO’s conundrum “Need to show the value of IT to the business” “Need IT infrastructure to support mission critical applications" “SLAs aligned to needs of the business? – the performance – cost trade-off” “Business needs changes implemented quickly – but we need to get it right” “Users are getting more and more demanding. There is a deluge of information to manage, and the underlying infrastructure is complex" “Our internal admin costs are too high” “We need to improve business performance” “We don’t know what we have got out there” “We need to be more customer oriented”
3
Global Data Center Marketplace
The New World
Globalization
Web 2.0
India & China
5
Data Center Market Trends
Various ‘Sourcing’ models Enterprise data center/IT consolidation Convergence of network & IT realms SPs adopting Virtualization/SaaS Utility Computing Increased volume of digital media Flexibility and support to scale IT infrastructure – web, apps, databases Increased power/cooling requirements Space constraints driving next-generation data center
6
Business Drivers for Outsourcing
7
Global Data Center Market IDC has forecast that the market will grow from $29.57 billion in 2005, to $48.37 billion in 2010 (CAGR of 10%). Worldwide IT and business services: Focus on SMEs, global assets, global sourcing for innovation, and industry focused BPO IDC’s latest forecast for the Asia/Pacific market (excluding Japan) in IT Services: 2010 China will overtake Australia In 2011 India will overtake Korea to become the third largest market in the Asia Pacific region.
8
India and China will improve their position in the APAC DC market APAC Data Center Market Split by Country (%)
INDIA Data Center Outsourcing ($ million)
“As China and India increasingly redefine the future of technology and innovation, knowing how to map a course into that future will be a core competency of the most accomplished travelers” … Gartner
Source: Gartner
9
Asian Data Centre Space Forecast: 2006 to 2010 4500
China
4000
Hong Kong
3500
Indonesia
3000
India Japan
2500 2000
Korea (South) Malaysia
1500
Philippines
1000
Singapore Taiw an
500
Thailand
0 2006
2007
2008
2009
2010
Chart 1 - Data Center Space Grow th Forecast 2006-2010 by country (Source: BroadGroup)
10
Asian Data Centre Market Forecast: 2006 to 2010 Country
2006
2007
2008
2009
2010
CAGR%
600
725
900
1150
1450
35
1100
1200
1300
1550
1750
13
320
360
400
480
530
40
India
1900
2500
3000
3500
3700
24
Japan
3800
3900
4000
4100
4200
3
Korea (South)
1000
1150
1250
1350
1400
10
Malaysia
900
1200
1300
1400
1500
15
Philippines
900
1000
1100
1150
1200
8
Singapore
1300
1500
1600
1700
1750
9
Taiwan
800
850
900
950
950
5
Thailand
1100
1150
1200
1250
1300
5
13420
15335
16950
17330
19580
11.5
China Hong Kong Indonesia
Total
Asia Data Center Space Forecast 2006-2010 (figures in '000 square feet) Space forecasts are based on carrier neutral facilities, carrier owned data centers, and space provided by hosting or IT service firms.
11
Drivers of Data Center Growth Globalization & Outsourcing
Regulation & Business Continuity
Outsourcing of IT and application development demands infrastructure and managed services Entry into new markets requires IT infrastructure and capabilities Alternate IT infrastructure and services for business continuity and compliance, particularly for Banking and Financial Services companies Data privacy and security issues Serve customers quickly and locally to improve experience
Time to Market Considerations
Application and services roll out to emerging markets such as India, China and South East Asia Data Center Infrastructure easily available for applications
Reduced IT Budgets
Rising costs of real estate and power Technology obsolescence, manpower churn, management overheads Skills of M&E – not necessarily core to IT
12
Challenges in building your own Data Centers
Real Estate
Core Infrastructure
Operations
Availability and cost
Space size and scalability
Proximity to fiber and choice of providers
Commitment - contract vs. lease
Heating, Venting, Air Conditioning (HVAC)
Power infrastructure and costs
Security (manned, access, surveillance)
Environmental controls – M&E
3 P’s: Pipe, Power, Ping
Maintenance
24x7 support (3 Shifts)
Monitoring
Security
Staffing and retention of skills
Statutory approvals and regulations
Fire suppression
Multiple vendor contracts
13
Selection criterion to Outsource IT infrastructure Location: Globally expansive footprint Ability to deliver consistent services across multiple regions Data centers in mature markets and emerging markets
Connectivity: Highly available, secure and integrated network
People: Technically competent IT staff
IT infrastructure and management: Well-defined and flexible roadmap Operational efficiencies Adherence to compliance
Financial Viability
14
…and sometimes it makes sense NOT to Outsource
Assets on the ground Custom/legacy system requirements Security requirements Extent and depth of management oversight Regulatory and compliance issues TCO consideration Footprint and facilities requirements
15
Data Centers Outsourcing Options in Asia Pacific Australia & New Zealand
Good IT infrastructure Experienced IT staff Good service quality Network latency – far from Asia No direct routes connecting India & China
South Korea, Japan & Taiwan Good network to China & HK Service quality and network performance are good Far from South Asian countries Limited capacity to India High labor and real estate costs
Hong Kong & Singapore
Good IT infrastructure Experienced IT staff Excellent network coverage Good language skills High labor & real estate costs
India & China Growing markets Service quality improved but inconsistent IT skills are improving Limited international connectivity Huge domestic market
16
Tata Communications in the Data Center Market
Vision Deliver a new world of communications to advance the reach and leadership of our customers.
Emerging Markets INDIA, ASIA incl CHINA, SOUTH AFRICA
NEW NEWWORLD WORLDOF OF COMMUNICATIONS COMMUNICATIONS
Converged IP Solutions
Managed Services
18
Tata Communications Data Center Strategy Global Footprint
Data center infrastructure in key geographies Presence in both developed and emerging markets
Integrated with Network Services
Leverage extensive global network integrated with data centers Network Services: IP, MPLS, Ethernet WAN for DC and end sites Carrier diversity to support redundancy requirements
Consistent Service Capabilities
Data centers are based on consistent standards – Tier 3 specifications Based on global and industry standards – ISO 20000, 27001, SAS70
Out-tasked Managed Services
Managed IT infrastructure services – servers security and network Managed Hosting and Storage Standards-based management for consistent service capability
Captive Data Centers
Leverage in-house experience and expertise along with partners to build captive data centers
19
Data Center Services and Capabilities Infrastructure
Multiple hosting and colocation facilities Network Colocation and IT Hosting suite of services Data Centers build to Tier 3 standards Integrated with backbone network
Colocation
Racks and cages Remote Hands Services IP and Bandwidth Services Managed Security- Firewalls, DDoS, and UTM
Hosting Services
Managed Hosting Services – Servers, Storage, Security, Network Virtualization, DB, Dual Site Recovery Replication in development 24 x 7- operations, management and monitoring and OS level management; Linux, Solaris, Windows, AIX Centralized Management Platform with customer view portal
20
Tata Communications – Global Footprint of Colocation and Hosting Facilities UK Stratford, London Highbridge Peterborough
EUROPE Lisbon, Portugal Seixal, Spain Derio, Spain
NORTH AMERICA Canada • Montreal • Toronto
USA • • • • • •
New York, NY North Alameda, LA Santa Clara, CA Portland, OR Wall, NJ Guam
INDIA • • • • • •
Mumbai Chennai Delhi Bangalore Hyderabad Pune
ASIA PACIFIC Shinagawa, Tokyo Toyohashi, Japan Singapore
21
The Road Ahead…
The Next Wave Driving Data Center Outsourcing Green IT
Energy use and power and cooling management and optimization New IT systems and infrastructures; alternate sources of power Cost reductions and savings; environmental impact
Virtualization
Logical server installed base growth: 65 million versus 45 million of physical server install base by 2010 Virtual Data Center; from consolidation to dynamic flexible infrastructure Anywhere Enterprise; DC, Application, Network and Desktop virtualization
Captive Data Centers
BO, BOT models; for the enterprise, but operated, managed as a service Issues of capacity management, infrastructure upgrades, aligned to business needs
Security
Anytime, anywhere information availability drives shift towards policybased security management and administration
Application/ Content Delivery
Networks make it a reality; network as a delivery platform; orchestration of virtual resources
23
Summary Key drivers for Data Center Outsourcing
Cost savings by avoiding capex investment Limited IT skill-set Technology challenges Improve performance and availability of IT systems and websites
Asia Pacific region is positioned to take a significant portion of Global Data Center Market Singapore is currently the regional hub of Data Center business Increased focus on emerging markets – India & China
24
Thank you! Vinay Nagpal Tata Communications www.tatacommunications.com
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